Press Release

WINTER PARK, Fla.--(BUSINESS WIRE)--Jul. 28, 2017--
Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) today reported unaudited
financial results for its second quarter ended June 25, 2017 and
announced a quarterly cash dividend of $0.09 per share to be paid in the
third quarter.

Highlights for the second quarter of 2017 compared to the second
quarter of 2016 were as follows:

The Company reported net income of $7.8 million, or $0.25 per diluted
share, in the second quarter of 2017 compared to net income of $6.9
million, or $0.21 per diluted share, in the second quarter of 2016.

Income from continuing operations in the second quarter of 2017
was $7.8 million, or $0.25 per diluted share, compared to income
from continuing operations of $7.0 million, or $0.21 per diluted
share, in the second quarter of 2016.

Net income in the second quarter of 2016 included a $465 thousand
expense related to disputed rent charges from 2006 through 2015
for a leased Company restaurant, as well as a $99 thousand gain
related to the sale of our closed Columbus, OH restaurant.

Excluding the disputed rent charges, gain on sale and results from
discontinued operations, non-GAAP diluted earnings per share
increased 13.6% to $0.25 in the second quarter of 2017 compared to
$0.22 in the second quarter of 2016. The Company believes that
non-GAAP diluted earnings per share provides a useful alternative
measure of financial performance. Investors are advised to see the
attached Reconciliation of Non-GAAP Financial Measure table for
additional information.

During the quarter the Company repurchased 400,000 shares of common
stock under its current share repurchase program.

Michael P. O'Donnell, Chairman and Chief Executive Officer of Ruth's
Hospitality Group, Inc., noted, “Our sales momentum accelerated in the
second quarter and was driven by a traffic increase of 2.1%. These
positive traffic trends in the quarter also positively impacted our
year-to date traffic, which now sits in positive territory. I am pleased
with the continued superior execution from our team members and
franchise partners which drove a 7.9% increase in total revenues and a
2.9% increase in Company-owned comparable sales. This topline
performance, combined with operating margin expansion and continued
execution against our total return strategy, allowed us to generate a
13.6% increase in Non-GAAP earnings per share.”

Review of Second Quarter 2017 Operating Results

Total revenues in the second quarter of 2017 were $100.0 million, an
increase of 7.9% compared to $92.7 million in the second quarter of 2016.

Company-owned Sales

For the second quarter of 2017, Company-owned comparable restaurant
sales increased 2.9%, which consisted of an average check increase of
0.8% and a traffic increase of 2.1%, as measured by entrees. The
calendar shift of Easter from the first quarter of 2016 into the
second quarter of 2017 positively impacted second quarter comparable
restaurant sales by approximately 70 basis points.

Average unit weekly sales were $103.5 thousand in the second quarter
of 2017, compared to $101.1 thousand in the second quarter of 2016.

70 Company-owned Ruth’s Chris Steak House restaurants were open at the
end of the second quarter of 2017, compared to 67 Ruth’s Chris Steak
House restaurants at the end of the second quarter of 2016. Total
operating weeks for the second quarter of 2017 increased to 910 from
863 in the second quarter of 2016.

Franchise Income

Franchise income in the second quarter of 2017 was $4.3 million, an
increase of 5.5% compared to $4.0 million in the second quarter of
2016.

81 franchisee-owned restaurants were open at the end of the second
quarter of 2017 compared to 80 at the end of the second quarter of
2016.

Operating income in the second quarter of 2017 increased 10.4% to $11.5
million, compared to $10.5 million in the second quarter of 2016. As a
percentage of total revenues, operating margin increased 25 basis points
year-over-year to 11.5%.

Food and beverage costs, as a percentage of restaurant sales,
increased 20 basis points in the second quarter of 2017 to 29.9%,
primarily due to a 3.8% increase in total beef costs.

Restaurant operating expenses, as a percentage of restaurant sales,
decreased 100 basis points in the second quarter of 2017 to 47.8%,
primarily due to a $465 thousand expense in the second quarter of 2016
related to disputed rent charges.

General and administrative expenses, as a percentage of total
revenues, increased 40 basis points in the second quarter of 2017 to
8.0% driven primarily by an increase in performance-based compensation.

Marketing and advertising costs, as a percentage of total revenues,
increased 60 basis points in the second quarter of 2017, primarily due
to the shift of marketing spend across the quarters.

Pre-opening costs, as a percentage of total revenues, decreased 60
basis points in the second quarter of 2017 to 0.2% driven by the
timing of new restaurant openings.

Development Update

The Company expects to open its third new Company-owned restaurant of
the year in suburban Denver, CO during the fourth quarter of 2017.
Additionally, the Company signed a lease for a new restaurant to open in
the second half of 2018 in Jersey City, NJ.

Franchise partners are currently expected to open their second
restaurant in China, a restaurant in Kauai, HI and relocate the
restaurant in Mississauga, Canada during the second half of 2017. In
addition, a new franchised restaurant is expected to open in Fort Wayne,
IN in 2018.

Quarterly Cash Dividend

Subsequent to the end of the second quarter of 2017, the Company’s Board
of Directors approved the payment of a quarterly cash dividend to
shareholders of $0.09 per share. This dividend will be paid on August
24, 2017 to shareholders of record as of the close of business on August
10, 2017, and represents a 29% increase from the quarterly cash dividend
paid in August of 2016.

Share Repurchase Program and Debt

During the second quarter of 2017, the Company repurchased 400,000
shares of common stock under its current share repurchase program, for
approximately $8.4 million or an average price of $21.08 per share.

At the end of the second quarter of 2017, the Company had $21 million in
debt outstanding under its senior credit facility.

Financial Outlook

Based on current information, Ruth's Hospitality Group, Inc. is updating
its full year 2017 outlook based on a 53 week year ending December 31,
2017, as follows:

Food and beverage costs of 29.0% to 31.0% of restaurant sales

Restaurant operating expenses of 47.0% to 49.0% of restaurant sales

Marketing and advertising costs of 2.9% to 3.1% of total revenues

General and administrative expenses of $32.0 million to $34.0 million

Effective tax rate of 31% to 34%

Capital expenditures of $23 million to $25 million

Fully diluted shares outstanding of 31.2 million to 31.5 million
(exclusive of any future share repurchases under the Company's share
repurchase program)

The foregoing statements are not guarantees of future performance, and
therefore, undue reliance should not be placed upon them. We refer you
to our recent filings with the Securities and Exchange Commission for
more detailed discussions of the risks that could impact our financial
outlook and our future operating results and financial condition.

Conference Call

The Company will host a conference call to discuss second quarter 2017
financial results today at 8:30 AM Eastern Time. Hosting the call will
be Michael P. O’Donnell, Chairman and Chief Executive Officer, Arne G.
Haak, Executive Vice President and Chief Financial Officer and Cheryl
Henry, President and Chief Operating Officer.

The conference call can be accessed live over the phone by dialing
719-325-4865. A replay will be available one hour after the call and can
be accessed by dialing 412-317-6671; the password is 7483430. The replay
will be available until August 4, 2017. The call will also be webcast
live from the Company's website at www.rhgi.com
under the investor relations section.

About Ruth’s Hospitality Group, Inc.

Ruth's Hospitality Group, Inc., headquartered in Winter Park, Florida,
is the largest fine dining steakhouse company in the U.S. as measured by
the total number of Company-owned and franchisee-owned restaurants, with
over 150 Ruth’s Chris Steak House locations worldwide specializing in
USDA Prime grade steaks served in Ruth’s Chris’ signature fashion –
“sizzling.”

For information about our restaurants, to make reservations, or to
purchase gift cards, please visit www.RuthsChris.com.
For more information about Ruth’s Hospitality Group, Inc., please visit www.rhgi.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” that reflect,
when made, the Company’s expectations or beliefs concerning future
events that involve risks and uncertainties. Forward-looking statements
frequently are identified by the words “believe,” “anticipate,”
“expect,” “estimate,” “intend,” “project,” “targeting,” “will be,” “will
continue,” “will likely result,” or other similar words and phrases.
Similarly, statements herein that describe the Company’s objectives,
plans or goals, including with respect to new restaurant openings,
strategy, financial outlook and capital expenditures also are
forward-looking statements. Actual results could differ materially from
those projected, implied or anticipated by the Company’s forward-looking
statements. Some of the factors that could cause actual results to
differ include: reductions in the availability of, or increases in the
cost of, USDA Prime grade beef, fish and other food items; changes in
economic conditions and general trends; the loss of key management
personnel; the effect of market volatility on the Company’s stock price;
health concerns about beef or other food products; the effect of
competition in the restaurant industry; changes in consumer preferences
or discretionary spending; labor shortages or increases in labor costs;
the impact of federal, state or local government regulations relating to
Company employees, the sale or preparation of food, the sale of
alcoholic beverages and the opening of new restaurants; harmful actions
taken by the Company’s franchisees; a material failure, interruption or
security breach of the Company’s information technology network; repeal
or reduction of the federal FICA tip credit; unexpected expenses
incurred as a result of the sale of the Mitchell’s Restaurants; the
Company’s ability to protect its name and logo and other proprietary
information; an impairment in the financial statement carrying value of
our goodwill, other intangible assets or property; the impact of
litigation; the restrictions imposed by the Company’s Credit Agreement;
and changes in, or the discontinuation of, the Company’s quarterly cash
dividend payments or share repurchase program. For a discussion of these
and other risks and uncertainties that could cause actual results to
differ from those contained in the forward-looking statements, see “Risk
Factors” in the Company’s Annual Report on Form 10-K for the fiscal year
ended December 25, 2016, which is available on the SEC’s website at www.sec.gov.
All forward-looking statements are qualified in their entirety by this
cautionary statement, and the Company undertakes no obligation to revise
or update this press release to reflect events or circumstances after
the date hereof. You should not assume that material events subsequent
to the date of this press release have not occurred.

Unless the context otherwise indicates, all references in this report to
the “Company,” “Ruth’s,” “we,” “us”, “our” or similar words are to
Ruth’s Hospitality Group, Inc. and its subsidiaries. Ruth’s Hospitality
Group, Inc. is a Delaware corporation formerly known as Ruth’s Chris
Steak House, Inc., and was founded in 1965.

RUTH'S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income - Preliminary and
Unaudited

(Amounts in thousands, except share and per share data)

13 Weeks Ended

26 Weeks Ended

June 25,

June 26,

June 25,

June 26,

2017

2016

2017

2016

Revenues:

Restaurant sales

$

94,145

$

87,244

$

193,600

$

183,181

Franchise income

4,257

4,034

8,647

8,535

Other operating income

1,613

1,376

3,306

2,828

Total revenues

100,015

92,654

205,553

194,544

Costs and expenses:

Food and beverage costs

28,114

25,853

56,693

54,299

Restaurant operating expenses

45,005

42,556

90,452

86,477

Marketing and advertising

3,412

2,618

5,859

4,587

General and administrative costs

8,035

7,058

16,171

14,721

Depreciation and amortization expenses

3,731

3,371

7,236

6,472

Pre-opening costs

173

737

1,352

1,092

Total costs and expenses

88,470

82,193

177,763

167,648

Operating income

11,545

10,461

27,790

26,896

Other income (expense):

Interest expense, net

(144

)

(253

)

(324

)

(466

)

Other

14

144

39

151

Income from continuing operations before income tax expense

11,415

10,352

27,505

26,581

Income tax expense

3,611

3,396

8,616

8,742

Income from continuing operations

7,804

6,956

18,889

17,839

Income (loss) from discontinued operations, net of income taxes

7

(48

)

(30

)

(169

)

Net income

$

7,811

$

6,908

$

18,859

$

17,670

Basic earnings per common share:

Continuing operations

$

0.26

$

0.22

$

0.62

$

0.55

Discontinued operations

$

-

-

$

-

-

Basic earnings per share

$

0.26

$

0.22

$

0.62

$

0.55

Diluted earnings per common share:

Continuing operations

$

0.25

$

0.21

$

0.60

$

0.54

Discontinued operations

$

-

-

$

-

-

Diluted earnings per share

$

0.25

$

0.21

$

0.60

$

0.54

Shares used in computing net income per common share:

Basic

30,548,258

32,138,846

30,561,741

32,382,746

Diluted

31,264,266

32,540,633

31,255,441

32,796,134

Dividends declared per common share

$

0.09

$

0.07

$

0.18

$

0.14

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

We prepare our financial statements in accordance with U.S. generally
accepted accounting principles (GAAP). Within our press release, we make
reference to non-GAAP diluted earnings per common share. This non-GAAP
measurement was calculated by excluding certain items and results from
discontinued operations and certain discrete income tax items. We
exclude the impact of the results from discontinued operations and
restaurant closing costs and the impact of certain discrete income tax
items because these items are not reflective of the ongoing operations
of our business, and we exclude the impact of rent dispute costs because
we do not expect to take similar accruals in the future. This non-GAAP
measurement has been included as supplemental information. We believe
that this measure represents a useful internal measure of performance.
Accordingly, where this non-GAAP measure is provided, it is done so that
investors have the same financial data that management uses in
evaluating performance with the belief that it will assist the
investment community in assessing our underlying performance on a
quarter-over-quarter basis. However, because this measure is not
determined in accordance with GAAP, such a measure is susceptible to
varying calculations and not all companies calculate the measure in the
same manner. As a result, the aforementioned measure as presented may
not be directly comparable to a similarly titled measure presented by
other companies. This non-GAAP financial measure is presented as
supplemental information and not as an alternative to diluted earnings
per share as calculated in accordance with GAAP.

Reconciliation of Non-GAAP Financial Measure - Unaudited

(Amounts in thousands, except share data)

13 Weeks Ended

26 Weeks Ended

June 25,

June 26,

June 25,

June 26,

2017

2016

2017

2016

GAAP net income

$

7,811

$

6,908

$

18,859

$

17,670

GAAP Income tax expense

3,611

3,396

8,616

8,742

GAAP Income (loss) from discontinued operations

(7

)

48

30

169

GAAP Income from continuing operations before income tax expense

11,415

10,352

27,505

26,581

Adjustments:

Restaurant closing costs

-

(99

)

-

148

Accrual of prior years' rent dispute costs

-

465

-

465

Adjusted net income from continuing operations before income taxes

11,415

10,718

27,505

27,194

Adjusted income tax expense (1)

(3,611

)

(3,539

)

(8,616

)

(8,982

)

Impact of excluding certain discrete income tax items

-

-

(247

)

-

Non-GAAP net income

$

7,804

$

7,179

$

18,642

$

18,212

GAAP diluted earnings per common share

$

0.25

$

0.21

$

0.60

$

0.54

Non-GAAP diluted earnings per common share

$

0.25

$

0.22

$

0.60

$

0.56

Weighted-average number of common shares outstanding - diluted

31,264,266

32,540,633

31,255,441

32,796,134

(1)

Adjusted income tax is calculated by multiplying the Non-GAAP
adjustments by our marginal federal and state income tax rates and
adding or subtracting the result to/from our GAAP income tax
expense.